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Banks appear somewhat overstretched

Goola Warden
Goola Warden1/13/2022 7:17 PM GMT+08  • 3 min read
Banks appear somewhat overstretched
Banks have had a good rally and are somewhat overstretched in the short term.
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The local banks — DBS Group Holdings (DBS), United Overseas Bank (UOB) and to a lesser extent Oversea-Chinese Banking Corporation (OCBC) — have been on a tear and have helped to carry the Straits Times Index towards the highest level since the onset of Covid-19 in January 2020.

A little more than a week ago, DBS broke out of a trading range at $29.87, indicating a target of $36. The local banking giant has almost reached this level. The chart pattern shows a strong up move as prices broke out on Jan 3.

But in the past couple of sessions, while closing prices have been higher, they are below the session’s opening prices — suggesting a little fatigue is creeping in. This is not exhaustion, but rather the archetypal wall that some marathoners (not all) hit at certain points — usually the 30km to 35km mark — during the 42-plus km jaunt. If DBS’s share price halts for a few sessions, and its indicators remain above their respective equilibrium levels, it could set the price up for further gains.

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